Should You Buy General Motors Stock?

Shares of General Motors GM surged on Monday after it was announced that the automaker is ready to debut its semi-autonomous driving technology. The question is, should investors consider buying GM stock?

A dozen Cadillac CT6 sedans outfitted with GM’s new “Super Cruise,” hands-free driver assist technology will depart from New York on Monday and drive all the way to Los Angeles in a demonstration of GM’s new self-driving car technology. The news sent GM stock up over 2.60% to a hit new 52-week high.

The world of automobiles is changing. More and more folks in cities take public transportation and rent a car for the day or even a few hours when needed. Electric cars may be the only models available in a decade and self-driving cars are on the way. Who is going to thrive in this environment and who is going to disappear? In the glory years for cars in the 1950s common names like Studebaker, Packard and American Motors vanished as the Big Three automakers dominated. Then foreign imports prospered and eventually contributed to bankruptcy of Chrysler two times around and finally GM. There is no promise that large American car makers or any current car makers will succeed in business as the world of cars changes.

GM Stock

The new General Motors came out of bankruptcy in 2011. Its stock price quickly went up to $39 a share before descending to $20 a share. By the beginning of 2014 GM sold for just over $40 a share and has gone up and down until finally peaking above $40 a share at it all time high. In short GM stock has recovered to where it was when the company came out of bankruptcy. It is not, like the FANG stocks, on a continual upward path. Nevertheless there are analysts who rate GM a buy. CNBC reports that Deutsche Bank predicts GM will launch a self-driving car fleet ahead of its major competitors.

Deutsche Bank said in late September that it expects GM to launch self-driving cars sooner than most expect.

Since then, GM’s management confirmed to Deutsche Bank that it will offer autonomous vehicles “well ahead of competitors,” research analyst Rod Lache and a team of analysts said in a Sunday report.

Lache also said GM plans to launch its own transportation service to compete with Lyft and Uber.

New technology can be profitable but all too often the winners in a race to implement new tech are not obvious in advance. The story of Betamax and VCR is worth remembering. Betamax was a superior technology but lost out to VCR. And today both are mere memories as they were supplanted by disc technology. And now people get their movies downloaded over the internet via Netflix and others while Blockbuster video is long gone. Should you buy General Motors stock at its all-time high on the promise of profits from self-driving cars and electric vehicles? Time will tell.

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